Fewer people are defaulting on their student loans

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Fewer students are defaulting on their student loans, according to new figures released Wednesday by the Department of Education.


The three-year default rate dropped to 13.7 percent among students who began repaying their federal loans in 2011 from 14.7 the year before, the department said.

But those figures may not tell the whole story.

The department quietly announced on Tuesday a change in the way it calculated the default rate for some colleges. By change, the department really meant leave some of the defaulted loans out of the calculation.


Officials tweaked the measure after colleges with large populations of low-income students worried their students' high default rates would jeopardize the universities' access to federal aid.

Schools with consistently high default rates - 30 percent or higher for two of three consecutive years - can have their eligibility for federal aid revoked. The department announced Wednesday that around 20 schools - mostly technical colleges and for-profit schools - are set to suffer this fate as a result of high default rates.

Without the adjustment, the number of schools left without access to federal aid could have been much higher, potentially impacting community colleges and historically black colleges.

Those schools have argued their higher default rates aren't a sign of failure to help their students land jobs, but of the student populations they serve. A single parent who attended night classes may be struggling to pay bills - child care, rent, etc. - that a 22-year-old who graduates from a four-year school and moves in with his parents while he searches for a job doesn't have to face.


The decision to provide some "wiggle room" for these schools may also allay some colleges' fears about the government's forthcoming college ratings system, which is set to include default rates as a factor in how well a school serves its students.

But some student advocates have said it allows schools to shirk their responsibility to graduate employable students.


“If a school isn’t held accountable for a default," Debbie Cochrane, a researcher for the Institute for College Access and Success, told Inside Higher Ed, "then the borrower shouldn’t be either.”

Emily DeRuy is a Washington, D.C.-based associate editor, covering education, reproductive rights, and inequality. A San Francisco native, she enjoys Giants baseball and misses Philz terribly.

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